Credit Cards - How to Not Pay Interest

The rise and rise of the credit card never seems to stop. Our flexible friend can be a great way to purchase goods and services if used well but can just as easily turn into our enemy when you find yourself faced with debts and unable to pay the bills in full each month. Most cards have an interest free grace period on purchases from the time you make the purchase to the day your next bill is due. If you pay by this date then credit cards don't incur any interest. However, if you can't afford to pay the balance in full by the due date each month your going to be charged interest on that balance and the interest rates on credit card can be very high.

Credit cards have many different interest rate offers - from 0% interest rate credit cards all the way up to extremely high interest rates, such as 50% or greater. In order to avoid having to pay this interest rate, it is important to pay your credit card off each month.

Interest rates are charged on an annual basis, but credit card users are charged a percentage of that interest rate each month until the balance is paid off. For example, if you charge $1,000 one month and paid your credit card off, you would not have to pay any more money than $1,000. However, if your interest rate was 13%, then you would have to pay an extra $130 a year for the initial $1,000 charge.

If you want to avoid paying interest on credit cards, follow these simple tips:

Credit Card Balance Transfer: When you use a credit card, you always have the option to transfer the balance of that credit card to a new credit card with a lower interest rate. A credit card balance transfer is a simple way to avod paying interest on your credit cards. However, make sure that the credit card that you transfer your balance to does not charge a fee for the balance transfer (or that your original credi card does not charge a fee).

Also, keep in mind that just because you transfer your credit card balance does not mean that the money that you owe will disappear. You will still have to pay back the money that you borrowed. You may be able to avoid these high interest rates by moving to a low rate credit card.

Debt Consolidation: Many credit card users have too many credit cards that they need to manage, including everyday credit cards and credit cards for specific stores. In order to pay just one credit card bill each month, you may want to consider debt consolidation. Using a third party you can arrange a debt consolidation program or loan. This allows you to roll all your outstanding credit card debts into one easy to manage loan with a single monthly repayment and hopefully a lower interest rate. When you use a debt consolidation program, you will have to pay a set monthly payment, which puts you on a payment schedule that should match your income and current financial situation.

Ask for an Extension: If you currently have a credit card with a low introductory interest rate that is due to expire you should try calling them and asking if they will extend the offer. When a low interest rate credit card offer is set to expire, simply call the credit card company and ask for an extension. If they do grant an extension be sure to ask they won't charge you extra fees for this service.

It can be a challenge to avoid paying interest on your credit cards. However, depending on the amount of credit card debt that you have accrued, your interest could cost you thousands of dollars each year. Therefore, a little legwork may go a long way to help you save your money and avoid paying high interest rates.

Article Source: http://www.articlesolve.com

Richard Greenwood is founder of the Click 4 Group which includes savings account comparison from leading banks. To find out how much you could save use the savings calculator.

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